ANTITRUST IN HIGHER EDUCATION: EXPLORING THE EFFECTS OF THE 568 PRESIDENTS GROUP AND THE CONSENSUS APPROACH ON FINANCIAL AID RECIPIENTS AND LOW-INCOME STUDENTS

Abstract

The 568 Presidents Group was a consortium of highly influential and elite universities formed in 1998 after Congress granted a limited antitrust exemption to need-blind higher education institutions. Under the exemption, universities were permitted to collude on a formula for financial aid with other need-blind schools, an act that Congress hoped would prevent universities from engaging in bidding wars, and instead, use their pool of funds to expand financial aid availability to a greater number of students in need. In 2003, select institutions in the 568 Presidents Group implemented the Consensus Approach as a collective method to determine a student’s financial aid. In 2022, the 568 Presidents Group disbanded due to a class action lawsuit that accused them of using the Consensus Approach to violate the exemption and artificially inflate costs students had to pay. While the case is not yet resolved, preliminary agreements to pay enormous settlement costs suggest that the institutions may have acted like a price-fixing cartel that negatively impacted students. This thesis uses a differences-in-differences research design to analyze the impact of the Consensus Approach and membership in the 568 Presidents Group on financial aid recipients and low-income student enrollment. Empirical results suggest a variety of conclusions. First, there was no negative effect on low-income student enrollment. Second, while being a member of the 568 Presidents Group during the implementation of the Consensus Approach negatively affected financial aid recipients, implementing the Consensus Approach itself may have had a positive impact on financial aid recipients. These results echo some of the decisions Congress has already made and also shed more perspective on the ongoing lawsuit.